Opinions expressed by Entrepreneur contributors are their own.
In the wake of the world’s fight to recover from the economic downturn of the past few years, many businesses have put their plans for global expansion on the back burner. Inflation, a labor shortage, the Federal Reserve raising interest rates, and a struggling global supply chain are some of the biggest problems facing businesses at present. On the surface, it might make sense to hold off on expanding globally; However, now might actually be the best time to rethink global strategy.
Global expansion may resolve some of the problems plaguing the business world today. Government lending programs and untapped sourcing talent in emerging economies worldwide can help businesses fund expansion and increase the labor market talent pool. Global expansion can play a key role in creating goodwill for America and benefit the local economies where we expand.
Related: Considering Global Expansion? Now Might Be Your Best Opportunity.
Should you expand?
The decision to expand your business is one you must make with care. Expansion may not be for everyone. Before expanding globally, companies must evaluate their needs and capabilities for expansion and then choose how they wish to proceed.
There are two main types of expansion: opening a branch office and outsourcing products or services. It might make sense for a larger company to open a branch office in another country, as they tend to have more capital to invest in such large projects. Opening a branch office may not be feasible for smaller businesses, though. For many, outsourcing products or services is likely more beneficial and highly lucrative to save on operational costs.
A few considerations when looking to expand globally include:
- Legal: Registering a business; Employment regulations; Taxes; Contracts; Intellectual property
- Cultural: Language barriers; Marketing strategies
- Economic & Political: Employment rate; Political stability (wars, riots, etc.); GDP and consumer purchasing power
- Financial: Cost of building and labor; Insurance; Travel; Loans
Expanding into new areas opens opportunities to test new products in new markets, leverage local talent to grow a business, and invest in the local economy.
Related: How Fintech Companies Can Benefit From Global Expansion
Where to expand
There are many countries with growing or stable economies that would be great locations for companies considering global expansion. Countries with emerging economies, such as Vietnam, Columbia, Mexico, Rwanda and Nigeria, have untapped talent that can and should be utilized. Many of these countries already have ties with the United States, so they will likely welcome such investments with open arms.
Those in emerging economies have the same abilities and talent that we have in America but often lack the opportunities to put them to use. Many also possess relevant linguistic and technical skillsets that American companies need when expanding into foreign markets. With the help of the same software and technology we use at home, they can work from anywhere in the world.
Historically, a lack of infrastructure has been a barrier to expanding into new markets. But as infrastructure investments in countries with emerging economies continue, power generation, internet access, and telephone service are more widely available and accessible. These crucial pieces of infrastructure make it increasingly possible for businesses to begin to expand to those markets.
Related: How To Go Global With Your Business
Why now?
The business world has been uncertain, moving slowly due to concerns about a potential recession. That makes this the perfect time to expand. It’s much harder to capture people’s attention when everyone is busy, the economy is booming, and everyone has expansion plans in the works. The economy will always have its ups and downs. When it is up once more, do you want to be clamoring for talent and opportunities simultaneously as everyone else? Getting ahead now will make all the difference when business is booming again.
Companies considering expanding, but are apprehensive about doing so because of the current economic climate, can utilize government resources that are designed to help with business development. USAID and EUAID have funding programs that can help smaller businesses with global expansion projects if the business’s goals align with the program. Both organizations focus much of their funding on Africa and Latin America, two regions that I believe are the next outsourcing hub.
I have spent years establishing connections and investing in countries worldwide, including Canada, Europe, the Philippines, China, India and Mexico. Throughout my time familiarizing myself with the best practices when expanding to new countries, I’ve found that the most crucial piece of advice is to visit the country you are looking to expand to.
Seeing the country with your own eyes, learning about its laws and economy, and meeting with citizens of the country who could one day be your colleagues not only helps you make a sound business decision but can help you gain new perspectives.
Even if you decide not to expand to that country, the worst that can happen is a good vacation!
